The Australian Dollar (AUD) maintains gains against the US Dollar (USD) on Thursday, defying disappointing economic data. The AUD/USD pair edges higher despite Australia’s Private Capital Expenditure contracting by 0.2% quarter-on-quarter in Q4 2024, falling short of the market’s 0.8% growth forecast and marking a reversal from the previous quarter’s 1.6% expansion.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser expressed optimism about inflation easing but stressed the need for tangible evidence before making policy adjustments. He highlighted persistent labor market tightness as a challenge in curbing inflation.
On Wednesday, the AUD came under pressure after Australia’s monthly Consumer Price Index (CPI) rose 2.5% year-over-year in January, aligning with December’s figure but missing the projected 2.6% growth.
Global trade tensions further weigh on the AUD, following US President Donald Trump’s recent statement confirming that new tariffs on Canadian and Mexican imports will proceed next week. The Trump administration’s plans to tighten chip export controls on China, a key Australian trading partner, add to risk aversion.
Meanwhile, the US Dollar Index (DXY) rises near 106.50 as investors gauge the economy’s resilience and the tariff outlook. Federal Reserve Bank of Atlanta President Raphael Bostic reaffirmed the need to maintain current interest rates to sustain downward pressure on inflation. Additionally, the White House issued an executive order requiring federal agencies to cut costs and justify spending, while US Treasury Secretary Scott Bessent pledged support for making Trump’s tax cuts permanent.
Technical analysis shows the AUD/USD pair hovering around the critical 0.6300 support level. The pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), signaling weakening short-term momentum. The 14-day Relative Strength Index (RSI) remains below 50, reinforcing the bearish outlook.
A break below the 0.6300 level could push the pair toward the 0.6087 region, the lowest since April 2020. Conversely, resistance is seen at 0.6323 and 0.6329, with a breakout potentially driving the pair toward the February 21 high of 0.6408.
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